(Reuters) – A gauge of manufacturing activity in the U.S. Mid-Atlantic region fell in December to its lowest level in nearly two years, with new orders and shipments contracting, in an indication that the manufacturing sector remains in crisis.
The Federal Reserve Bank of Philadelphia said Thursday that its monthly manufacturing index unexpectedly fell for the second straight month to -16.4 – the lowest level since April 2023 – from -5.5 in November. The median forecast among economists surveyed by Reuters was for a reading of 3.0. Negative readings indicate a contraction in activity.
The report’s new orders index fell to -4.3, the lowest level since May, from +8.9 in November.
Factory managers remained optimistic about the outlook six months from now, but their growth prospects nonetheless softened from a three-year high hit in November.
The Philadelphia Federal Reserve’s regional report suggests that the manufacturing sector, which represents just over 10% of the economy, continues to struggle to find its footing following the Federal Reserve’s interest rate hikes in 2022 and 2023. Yes While the Federal Reserve has moved on to rate cuts in the last half of this year, much further easing is not expected from here and market measures of borrowing costs remain notably higher than at the beginning of this year. 2022 and continue to put pressure on investment.
On Tuesday, the Federal Reserve reported that manufacturing production in November recovered less than expected from the previous month and output declined 1.0% year over year.
Also clouding the outlook are President-elect Donald Trump’s ambitions to impose steep new tariffs on goods imported from abroad, which could trigger counteractions by U.S. trading partners to impose on U.S. exports.
(Reporting by Dan Burns; Editing by Chizu Nomiyama)